QUESTION DETAIL

Accountant

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My deceased client received a 1099-C for $15,000 on home short sale. The sale was about 9 months after death. Is the estate eligible for debt forgiveness, if so what form(s). Debt was on acquisition. Goes on 1041?

ANSWER

The BIDaWIZ Team's Answer:

What was the condition of the estate prior to the short sale? Was the estate insolvent? If so, there may be precedent to apply Section 108 treatment to the sale in which the estate could exclude the Cancellation of Debt.

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